Good morning, and welcome to the EastGroup Properties Second Quarter 2021 Earnings Conference Call. All participants will be in listen only mode. Mode. Please note this event is being recorded. I would now like to turn the conference over to Marshall Loeb, President and CEO.
Please go ahead.
Good morning, and thanks for calling in for our Q2 2021 conference call. As always, we appreciate your interest. Brent Wood, our CFO, is also participating on the call. And since we'll make forward looking statements, we ask that you listen to the following disclaimer.
Please note that our conference call today will contain financial measures such as PNOI and FFO that are non GAAP measures as defined in Regulation G. Please refer to our most recent financial supplement and to our earnings press release, both available on the Investor page of our website and to our periodic reports furnished or filed with the SEC for definitions and further information regarding our use of these non GAAP financial measures and a reconciliation of them to our GAAP results. Please also note that some statements during this call are forward looking statements as defined in and within the Safe Harbors under the Securities Act of 1933, the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995. Forward looking statements in the earnings press release along with our remarks are made as of today and we undertake no duty to update them whether as a result of new information, future or actual events or otherwise. Such statements involve known and unknown risks, uncertainties and other factors, including those directly and indirectly related to the outbreak of the ongoing coronavirus pandemic that may cause actual results to differ materially.
We refer to certain of these risks in our SEC filings.
Good morning, and thank you for your time. We hope everyone is enjoying their summer. I'll start by thanking our team for a great quarter. They continue performing at a high level and reaping the rewards of a very positive environment. Our second quarter results were strong and demonstrate the resiliency of our portfolio and of the industrial market.
Some of the results the team produced include funds from operations coming in above guidance, up 10.5% compared to Q2 last year and $0.03 ahead of our guidance midpoint. This marks 33 consecutive quarters of higher FFO per share as compared to the prior year quarter, truly a long term trend. Our 2nd quarter occupancy averaged 96.8%, up 20 basis points from Q2 2020. And at quarter end, we're ahead of projections at 98.3% leased and 96.8 percent occupied. Our occupancy is benefiting from a healthy market with accelerating e commerce and last mile delivery trends.
Quarterly re leasing spreads were among the best in our history at 31.2% GAAP and 16.2% cash. And year to date, those results are 28% GAAP and 16% cash. Finally, cash same store NOI rose by 5 point 6% for the quarter and 5.8% year to date. In summary, I'm proud of our team's results, putting up one of the best quarters in our history. Today, we're responding to the strength in the market and demand for industrial product both by users and investors by focusing on value creation via development and value add investments.
I'm grateful we ended the quarter at 90 point 3 percent leased, matching our highest quarter on record. To demonstrate the market strength, our last three quarters were the highest three quarterly rates in the company's history. Looking at Houston, we're 96.5 percent leased, with it representing 12.3 percent of rents, down 150 basis points from a year ago and is projected to continue shrinking. Brent will speak to our budget assumptions, but I'm pleased that we finished the quarter at $1.47 per share in FFO and are raising our 2021 forecast by $0.09 to $5.88 per share. Helping us achieve these results is thankfully having the most diversified rent role in our sector, with our top 10 tenants only accounting for 7.9% of rents.
As we've stated before, our development starts are pulled by market demand. Based on the market strength we're seeing today, we're raising our forecasted starts to $275,000,000 for 2021. This represents a record annual level of starts for the company. And to position us following the pandemic, we've acquired several new sites with more in our pipeline along with value add and direct investments. More details to follow as we close on each of these opportunities.
And Brent will now review a variety of financial topics, including our 2021 guidance.
Good morning. Our second quarter results reflect the terrific execution of our team, strong overall performance of our portfolio and the continued success of our time tested strategy. FFO per share for the Q2 exceeded our guidance range at $1.47 per share and compared to Q2 2020 of $1.33 represented an increase of 10.5%. The outperformance continues to be driven by our operating portfolio performing better than anticipated, particularly the quick re leasing vacated space during the quarter. From a capital perspective, during the Q2, we issued $60,000,000 of equity at an average price over $162 per share, and we issued and sold $125,000,000 of senior unsecured notes with a fixed interest rate of 2.74 percent and a 10 year term.
In June, we amended and restated our unsecured credit facilities, which now mature July 2025. The capacity was increased from $395,000,000 to $475,000,000 while the interest rate spread was reduced 22.5 basis points. In our ongoing efforts to bolster our ESG efforts, we incorporated a sustainability linked metric into the renewal. That activity, combined with our already strong and conservative balance sheet, has kept us in a position of financial strength and flexibility. Our debt to total market capitalization was 17%, debt to EBITDA ratio at 4.9 times and our interest and fixed charge coverage ratio increased over 8 times.
Our rent collections have been equally strong. Bad debt for the first half of the year is a net positive $90,000 because of tenants whose balance was previously reserved but brought current exceeding new tenant reserves. Looking forward, FFO guidance for the Q3 of 2021 is estimated to be in the range of $1.46 to $1.50 per share and $5.83 to $5.93 for the year, a $0.09 per share increase over our prior guidance. The 2021 FFO per share midpoint represents a 9.3% increase over 2020. Among the notable assumption changes that comprise our revised 2021 guidance include: increasing the cash same property midpoint by 18% to 5.2%, increasing projected development starts by over 30% to $275,000,000 and increasing equity issuance from $140,000,000 to $185,000,000 In summary, we were very pleased with our 2nd quarter results.
We will continue to rely on our financial strength, the experience of our team and the quality and location of our portfolio to carry our momentum through the year. Now Marshall will make some final comments.
Thanks, Brent. In closing, I'm excited about our first half of the year. We're ahead of our forecast and are carrying that momentum into the back half of the year. Our company, our team and our strategy are working well as evidenced by our quarterly statistics. And it's the future that makes me the most excited for EastGroup.
Our strategy has worked the past few years and we're seeing an acceleration in the number of trends for our properties and within our markets. Meanwhile, our bread and butter traditional tenants remain and will continue needing last mile distribution space in fast growing Sunbelt markets. These, along with the mix of our team, our operating strategy and our market has us optimistic about the future. And we'll now open up the call for any questions.
We will now begin the question and answer session. Our first question is from Daniel Santos of Piper Sandler. Please go ahead.
Hey guys, thanks for taking my questions and congratulations on a strong quarter. So my first one is on development yields. Last quarter you spoke about potentially seeing some development yield pressure, but from your results it seems like you've been able to maintain
fairly consistent yields. So I guess I would
ask for some commentary there.
You're right. I guess it shows my inability to predict perhaps, but I'll compliment the team. Your construction prices have continued to rise and then actually deliveries are continuing to get elongated. So I still expect more downward pressure on our development yields to date. The offset of the market has been so positive as we've been able to offset that with rent growth in the markets and maintain those 7 yields.
And probably especially if we look back at last year, the other kind of gratifying part of that is cap rates have come down. They've been low in the major markets within our footprint, say, the Los Angeles, Dallas, Atlanta, but they've continued to come down maybe another 50 to 70 basis points really across almost all of our significant markets. So our spread to develop yields to market value is probably closer to 300 basis points. At a 7, probably almost everywhere we're developing is probably close to 4, in some cases, below 4 today in a number of cases. I still think they'll come down, but thankfully they've got room to come down and for us to still be pretty profitable opportunity for EastGroup.
Perfect. That's super helpful. My next question is more of a big picture question. Employers across the country have all lamented about the labor shortage and the number of unfilled positions, but it seems like despite that, tenants are still growing and taking more space. So I guess my question is, are you seeing any sort of on the ground impact as far from the labor shortage as far as taking space?
Or are tenants really commenting that their expansion is hindered by the labor shortage?
Good question. And typically the larger the tenant, the more it makes sense, the larger the labor challenge is for them or the more they think about that. I've had brokers say to me in the past, the kind of main factors were always the rent, the tenant improvement allowance, the lease term and now where do you draw your labor pool becomes part of that a bigger and bigger part of that equation. For us, we probably see it more and it's not given the leasing velocity that we've seen this year that has been better than we had anticipated and feels like it's certainly continuing into the back half of the year, probably more in construction costs of getting the trades and we are seeing a rise in factor in that. But to date, it hasn't affected our leasing, you're right.
Got it. That's it for me. Thank you.
Thanks, Dan.
The next question is from Emmanuel Korchman of Citi. Please go ahead.
Hey, this is Chris McCurry on with Manny. Just a quick question on development starts. So with the increase in development starts guidance, can you
just provide some
commentary on funding sources and the balance between common stock as well as dispositions and how this may impact the acquisition pipeline?
Yes. Hey, good morning. This is Brent. Yes, the good news is we have we view great access to capital, both via issuing equity and or the debt markets. As we disclosed this quarter, we just renewed our credit facility, increasing our total capacity from $395,000,000 to $475,000,000 and really pleased to have decreased our spread, our rate on that by 22.5 basis points, which is going to be significant over the course of each year.
So from a capital standpoint, we're not constrained. The guys as they can unearth opportunities, which are more and more challenging, but we have that ability. And really, our dispositions are more of just good pruning from being good steward of operating our portfolio and just kind of pruning from the bottom, but not so much as a source of capital needs. We just don't need capital in that manner. Again, we view our stock price relative to whatever you want to compute NAV as attractive.
And again, debt market is attractive. We're pretty much at historical lows in terms of our debt to EBITDA now being 4.9% and debt to total market cap in that 16% to 17% range. So very, very good shape for capital sources for sure.
Got it. And just a quick follow-up on can you comment on some of the markets you are focused on expanding in right now? And are some of your top performing markets this quarter a good read through on where you'll choose to grow?
Good question, Chris. This is Marshall. Certainly some, although I to us, I kind of think of it more of if we think really longer term of a portfolio allocation. To me, we've been working the past few years. We like Houston, but kind of reducing that Houston exposure.
So it's gratifying to see as we were looking back a 50 basis point drop from quarter to quarter down in the low 12s and that will continue dropping, but we'll still stay active in the Houston market. We're under allocated out west when you look at the California markets, Denver, Las Vegas, some of those love to grow there. But they're really the ones we're under allocated are also the most feels like the most competitive markets. We like Miami, continue to develop down there. Austin, Texas and Dallas have been really hot markets and we're we certainly have an allocation there, but we'd love to keep growing in those.
And I kind of view it as Brent and I, if we can manage the portfolio allocation and sometimes that comes from a good time to be a seller of assets. So that in each of the teams in the field have that runway of when they find the right opportunity to go create value, we can execute on that. And if it requires us to sell an older asset in the market, that's a good problem to have because we thankfully, there's still 1031 opportunities out there that we can recycle that capital and put it back in the development pipeline. So I hope that's helpful. It's really more of a long term like you think of your 401 allocation or something like that.
Got it. Thank
you. Sure.
The next question is from Elvis Rodriguez of Bank of America. Please go ahead.
Good morning, guys, and great quarter. Perhaps, Marshall, you can share an update on your Atlanta Land acquisition. And I know you mentioned some potential to opportunities to acquire more in the balance of the year. In particular, how much runway does that give you to develop in Atlanta? And then also what other markets are you currently looking into?
Sure. Good morning and hope you're well. Atlanta and I was just there recently and I'll compliment John Coleman and our team there. We are the acquisition this quarter was really an add on to a parcel on I-twenty West that we had acquired at the end of the year that will hopefully put into production later this year pending steel deliveries and timing of that. And then they've got a few sites tied up that we're working our way through zoning and permitting and kind of the pricing given the topography is a little more challenging in Atlanta, say, than most of Texas, for example, or things like that.
But we've got some good runway for growth in Atlanta. And the other nice aspect of Atlanta is going back to the end of the year, we had tied up 3 buildings on the value add that we had agreed to purchase when they were complete and we've been able the team has to execute all three of those are in the portfolio at 100% leased and blended yield on all three of those is probably a 6.8%, 6.9%. So taking the construction risk out, the market cap rate on each of those is probably around a 4%. So we love the value creation from there. Other markets where we're looking and it really kind of depends on where we've got land, but we've got various stages between a little bit of time left to close, but Charlotte, we're running out of land thankfully at Steele Creek and have some land that's been publicly announced there that the airport authority is selling.
Charlotte, Austin, as I mentioned, a market we'd like. We've got some land parcels there. Phoenix working on land, Dallas. So it's kind of each of the markets, it's harder and harder. And I will say the number of developers, the strength in the industrial market broadly is not a well kept secret.
So the number of active developers in our market is up pretty materially over the last couple of years. So it's harder and harder to find those good parcels. But we've got a fair amount of several 100 acres kind of tied up and working our way through diligence on those. And hopefully, we'll close as many of them as makes sense as we get to the end, if we can get permitting and zoning and all the things like that, that take time.
Thanks, Marshall, for the update. And then perhaps you can maybe speak to the tenant retention in the quarter and how you look at that versus rent growth, sort of like that push and pull of keeping a tenant and the revenue in the portfolio versus really pushing for that higher rent that you can probably expect from a new tenant?
No, good question. And typically, we've been keeping a well performing tenant long term is where you'd rather go. And thankfully, almost every tenant, I'd say high 90% have their own tenant rep broker by the time they sit down with us. And so they're aware of the market and we'll push rents. Obviously, we have a gap over 31%.
So we'll we've had lower tenant retention year to date, but we typically we retain about 70% of our tenants. Last year, we were closer to 80%. And probably two factors have driven understandably put their growth plans and what they were thinking on hold. And that helped us in the short term and that most tenants just stayed put and didn't move. And I think now as the economy kind of stabilizes or people get comfortable operating in this environment, we are seeing tenants expand.
That's helped us lease a number of our developments have been existing tenants that have taken on more space and we've moved them from building 2 in a park to building 8 in a park, for example, and things like that. And then the other thing I'll compliment the team on, there's been a few of our of the 2020 rent deferral customers that came and they struggled through it. But given how tight the market are is, it's not as much pushing rents as improving our credit quality. So we've vacated some pretty large tenants within our buildings, 190,000 foot. An Amazon lease that we signed in San Diego in Q1 was a tenant that had struggled over the years, another one in Southern California in Q2.
And we got strong releasing spreads in each of those cases, but it was also a good opportunity to move a tenant where maybe their business was struggling a little bit and put a better quality tenant in. You saw 1, it's in our top 10 tenants, but it's a 3PL and it replaced a tenant who had struggled a bit over the past couple of years. So that helps. That's really how we think about it. A great time now to improve our credit quality of our tenants.
I like how diversified our portfolios with our top 10 under just under 8%. And then we'll, in the meantime, push rents as best we can, but probably not create vacancy because I think most of the tenants know where the market is certainly by the time we finish negotiations.
Thank you. Sure.
The next question is from Tom Catherwood of BTIG. Please go ahead.
Thank you and good morning everyone. Marshall, in your opening remarks, you a while now. But with population growth in the Sunbelt, it seems like there's been more attention on swifter fulfillment. Where are your markets in terms of the build out of last mile distribution facilities? And are you seeing any shifts in how your tenants are using your shallow base space
for this?
Yes and no. I guess, we certainly see it. We've part of the leasing volume this year, it seems to be more and more and also 3PLs, so kind of that freight fulfillment and really last mile delivery. I do see tenants we've seen an increase in retail oriented tenants taking space for delivery. And then as the brokers explained it to us, anything that speeds up delivery, whether it's a good or a service, that's where the world's going right now.
So in a lot of our cases, we also have the it can be the Trane air conditioning, Goodman, any of those Baker, the large HVAC companies, the pool supply guys. So if you're in Atlanta or Dallas and you're a, I guess, residential or commercial operator, this time of year, if your HVAC goes out, you want that delivery person, the service person there quickly. And then we do see it within e commerce also as well as it's really what used to be acceptable demand was maybe 3 to 4 days if you go back even further than that. And now it's Amazon Prime, Amazon Prime now. And we really anticipate Amazon certainly been a as we've all talked about a large consumer space over the last, call it, 18 months and doesn't really feel like they're slowing down their program.
And we think the other retailers, if our business cards were switched, you've got to find ways to compete with Amazon on price and delivery. So I think that's where our portfolio fits well. And our pitch to a number of these retailers, whether it's e commerce or delivery or even as we daydream it, curbside pickup, our buildings are efficient and close in and last mile and you're going to have compete with Amazon Prime now. So it's moving in that direction, and it really depends more on that retailer than it does about market by market. Yes, you're right.
Certainly in Los Angeles and New York, but I don't think Dallas, Phoenix, Atlanta or Miami are very far behind. We certainly see it in Miami, where our project is our park is pretty far east compared to the competition. And when you think in South Florida, that basically means we're closer to the coast, closer to where the high end residential is all along the Atlantic.
Got it. Appreciate that, Marshall. And then final for me, you've picked up some additional value add properties in this quarter, kind of 2 parts. First, when you're doing underwriting of value add versus stabilized,
what's the
kind of spread in terms of yield that you're typically underwriting on these deals? And then second, are there some markets that have more opportunities for value add than others right now? Obviously, you've been active in Atlanta and Greenville so far, but kind of what are you seeing as far as trends in specific markets?
I guess historically, you're looking back, we would say we developed to a 7 and maybe the markets and now as I mentioned down to 4. And then a value add would maybe pencil out around mid-5s to 6. So you're getting maybe half is the spread is maybe half of what it is, but you don't carry the land, go through the zoning, the entitlement, the construction risk, everything like that. So the return should be a little lower. The teams executed well until we've had really strong returns, almost the same as our development yields without that land carry or construction risk.
The tricky part now, I think the market, the appetite is so great for industrial. What we've seen over the years, we really moved to our value add because acquisitions, lease products got so extensive. We said, why don't we take on the leasing risk and we can do that and development. But I think the market is less and less afraid of vacancies. So we've seen the spreads continuing to come down on value adds.
It really depends on those developer relationships. They usually have a financial partner and the model works where we'll talk to them and say we'll buy you out at certificate of occupancy. You'll get part of your promote with your financial partner and you can move down the street and go build the next building. So that's where it's worked and it's typically where we've been able to develop a relationship with that particular developer and maybe do multiple transactions. And I do think where the market is more and more of those cases, we see them listing it with one of the national brokerage groups and that's where the pricing.
But it's a rather than we're buying at a 6 and the market's 4, the market's paying 4.25 in the market cap rates. That spread has gotten awfully tight because of the fear of vacancies continues to go down. This much capital and only so many places for it to go to work.
Understood. Thank you, Marshall.
All right. Sure. Thanks, Tom. The next question is from Dave Rodgers of Baird. Please go ahead.
Hey, guys. It's Nick on for Dave. I just have a question on utilization. Store shelves continue to be somewhat empty and then warehouses are somewhat full. Just and import activity is rising.
I guess, what's the disconnect on getting products to the consumer in this market?
I guess if I'm answering that and Brent jumped in, what we we've kind of used the phrase that demand feels like it's here today. And certainly, we've seen it with our leasing and our tenant growth and what's been a mess, and it doesn't feel like it's going to get resolved anytime soon. As you mentioned, it's getting product. There's still a backlog of ships at the ports of LA and Long Beach and with the Delta variant and things like that, that supply chains are just snarled and won't be resolved anytime soon. So it's people seem to be purchasing what's available, not what's your choice of appliances or whatever item it is you seem to pick.
And I think that whereas we watch it and try to evaluate it and experience it too, it's putting stress on our development pipeline because it takes longer for us to get the steel, which is usually historically made in China, but there's no capacity right now with the ships and the ports and things to get the steel to the U. S. And it's more expensive. But in the meantime, although it's taking us longer to build out our spaces, It's the same impact on all of our competition. So that's partially why our occupancy and percent leased have been so high, And we think that's going to last for a few more quarters absent some economic shutdown again, unless there's another big enough COVID spike that the government shuts down the economy.
Great. Thanks for that. And then I guess one question just on development. You had that build to suit opportunity in San Diego last quarter. Just commentary on having tenants approached you on build to suit opportunities on your land bank?
Or what's your appetite for that?
Yes. We good catch or good note. Yes, we were happy about that and that we were planning a multi building park and it worked for Amazon for a facility there. So we're under construction. Hopefully, we'll deliver it in Q1 of next year.
And really, we set our goal when we bought the land. I know we like the building design, although it's a building rather than 5 or so, which we originally had planned for the site. But we are seeing more and more of that. The tenant sizes seem to be growing and we've got another 1 or 2, you never know. I mean, it's always competitive for those pre lease opportunities.
But if we can manage the construction risk, which we have by the time we give them their bids. But worst case, we run out of land, which is what was our goal when we acquired it. And now we're looking for other sites in San Diego. So we'll find that. But we had a bunch of land in Atlanta or in San Diego in Q4 and suddenly we're out.
So now we're scrambling to find the next land parcel. But I hope we'll see a few more and more of those. And where cap rates are, we think we're getting a great return with a long 12 plus year lease with Amazon on that side.
Great. Thanks guys.
Sure. The next question is from Michael Carroll of RBC Capital Markets. Please go ahead.
Yes. Marshall, talking a little
bit about the land acquisitions, and I think you mentioned this in your prepared remarks and a little bit through the Q and A that you have a number of pending transactions for potential land sites. I think you're talking about that you need to get them entitled before you close on those deals. Maybe you could provide some color on what type of sites that you're looking at and the timing of those acquisitions and when could they close and how much development could they support?
I'm trying to get working back through that. We do and I'll really speak, which I like our model. Everybody's got a little bit of a different model. And Brent and I were both in the field, although especially with me, it's been a minute. But where if you have Texas, for example, you're responsible for everything in Texas and that's existing portfolio as well as finding opportunities.
So we don't have a Chief Operating Officer. We don't have a Chief Investment Officer. So besides maybe saving a little bit of G and A, it's really up to those teams in the field to go find the opportunities. So it's typically you're looking at aerials on the computer or in the car with brokers and just turn over a lot of zones and I'll compliment the team. They keep finding ways to unearth parcels every once in a while it's a greenfield.
Usually it's something in this market as many developers, a number here's a stat that surprised me recently when I was in Dallas and was meeting with the CBRE team that they said they were tracking maybe 5 years ago, 20 plus active developers in the Dallas market and now that number is approaching 100 for industrial. And so that tells you how before we've got 20 call it 28 people out looking for land sites and maybe in the 90s today of how hard it is to find land, but our building footprints are smaller. And so sometimes there's parcels work for us that may not work for a developer that's building bigger boxes and things like that, which is mostly where the new supply falls as it's the edge of town and a 500,000 square foot and 1,000,000 plus square foot building. So they keep finding them. We have and again, we'll see where these all shake out, but several 100 acres still under contract that would close by the end of the year and then value adds as well.
And then a few and probably another close to 100, I have to look further out into 2022, but I know there are some parcels that take longer than that. What we'll try to do, obviously, we'll tie it up as long as that seller will allow us to reduce that construction risk. Ideally, we in a lot of cases, we're ready to go and put it into production as quickly as we can. But the more we can minimize any of that construction risk, zoning risk, permitting, things like that getting through the cities, we think that's kind of that risk reward is helpful for our shareholders. So it's a they'll tie it up and a whole process will go through.
And then as soon as we close, ideally, we'd love to break ground the next day to minimize the carry. Okay. Great. That's a great color. Yes.
That's a big part of their job, Brent. Sorry, any color? You've lived that world for a long time too.
Yes. No, I think that's exactly it. When we say entitlement, some states like Texas is a little easier to migrate through the process. But in the end, you're trying to make sure you've got a clear path to close, meaning there's no surprises regarding zoning or approving your plans or those type things. And like I say, in some markets that process quicker like a Texas and in some other markets that process takes quite a bit more time.
And so one thing that behind the scenes has become more noticeable internally, maybe not externally, is just the time it takes to procure land. When you guys see it hit the supplemental schedule and you say, well, you always say it's land constrained, you're always buying sites. But I would say our lead time over the last 15 years have probably come from 3 to 6 months from tying up land and closing to 18 to 24 months. And meaning the time it takes to go through the hoops or to if you've got a redevelopment where you're going to close a golf course or a horse race track or move somewhat off the site, that type of thing, it just takes way more time. And so that's why it's good.
So what the public REITs have an advantage over others is that you've got boots on the ground and we've got a great team in the field that can continue to make that happen. And it's allowing us to create tons of NAV through that platform.
So what's increasing that timeframe? Is it just that you're being more creative, trying to find sites that could support, industrial and you need to entitle it? That was before maybe you're buying stuff that was already entitled for industrial, is there some more competition? I mean, what is increasing that timeline?
It's what's available. I mean, when I moved out to Houston 20 years ago, I mean, you literally could still pull up to a green we say green just a undeveloped track of land that had utilities at street and you put it under contract buy and build buildings at the time of the street and you went about your business. And then now those type of opportunities aren't there. So you're looking at trying to re zone a property, which trying to get most of the time that's down zoning, meaning it's probably a higher and better use or higher better than industrials. You're trying to get it zoned down to industrial.
You're trying to buy a business or 2 and close them and replat the land into 1 piece. I mean, there's now there's just so much other legwork that goes into getting it shovel ready as opposed to literally just pulling out and sticking your shovel in the ground. There's a lot of behind the scenes work that has to go into it. It's not an easy it's one reason that you've seen supply not be as great, something like why aren't more people doing this? Well, quite frankly, it's not the development side of the business is not an easy some of the bullet REITs have great teams that make it look easy, but it's not an easy thing to do.
It would not be easy for you and I to go out and get a great track of land in a major metropolitan area and just go to town on it. I mean, there's a lot of people trying to do that.
Okay, great. Thank you.
Sure. This concludes our question and answer session. I would like to turn the conference back over to Marshall Loeb for closing remarks.
Okay. Thanks everyone for your time. I appreciate your interest in EastGroup. I know it's a busy earning season. Any follow-up questions, Brent and I are certainly available and hopefully see you in person at a conference before too long.
Thanks again.
Thanks everybody.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.